The World Economic Forum in Geneva was founded and is chaired by Dr. Klaus Schwab, an engineer and economist with an impressive CV. Schwab graduated summa cum laude with a PhD in Economics, has an engineering doctorate from the Swiss Federal Institute of Technology, and a Master of Public Administration from Harvard’s John F. Kennedy School of Government. He seems well suited to head this organization, established in 1971. The Forum is not affiliated with any “political, partisan or national interests.” Its mandate can be aptly summarized in Schwab’s own words: “…an impartial platform for transforming dialogue into insights…into agendas, and…into action." The Forum aims to provide a neutral response to fluctuations in the economic and socio-political environment internationally: Noble - and useful - goals, at least in theory.
Schwab speaks of the complexities arising from the many interconnectivities we now share, relationships made simultaneously simpler (through technological advances) and more multifarious. Many of the economic and social problems we face are shared, but we certainly don't all live on one land mass under one government, with one set of cultural norms. When any one global system is under stress - as was the case during the recent Global Economic Crisis - there might be a tendency on a national level to close ranks, level blame. There's also, of course, a desire to come up with solutions, with clearly established goals for each country. But those goals are not always easily attainable or even evident – hence the finger-pointing, closing of doors and tendency to turn a blind eye.
And the World Economic Forum is one of the leading powers responsible for bringing nations together in times of crises like this. The Forum has usefully outlined the most pressing global risks in 2014; foreseeing problems, no doubt, in order to preemptively deal with them. What sort of risks should our nations, our governments and our citizens be focused on avoiding this year? Read on for the top 10 High Priority global risks of 2014, as laid out by the World Economic Forum and ranked from 10 - 1 as per the WEF report.
10 Profound political and social instability
Many of the presented risks are interconnected on our list: Social instability by its very nature would necessarily include “food crises,” which is prioritized slightly higher on the index. But other concerns leading to social instability include: pandemic outbreak, antibiotic-resistant bacteria, unmanageable burden of chronic disease, severe income disparity, and mismanaged urbanization (such as poor urban planning). Then there's failure of infrastructures and their supply systems. Political concerns of course consist of things such as increasing corruption, collapse of governments (especially those in nations of greater geopolitical importance), major increases in organized and illicit crimes and illicit trading, violent inter-state conflicts with regional consequences, and so on. This doesn't sound great. Already this year, some of these sombre predictions by the WEF have materialised; notably in Ukraine and Russia, where riots and violence have been highly publicised in the last month.
9 Failure of a major financial mechanism/institution
It has been just over five years since the collapse of the Lehman Brothers, which was the fourth-largest US investment bank and a major global financial services firm. Their bankruptcy is regarded by many as the beginning of what has become a massive global economic crisis, with repercussions affecting national economies around the world - perhaps most notably in America and the EU, although few have come away unscathed. If the collapse of one firm has such repercussions, what if it happened again, and again? The world’s finances, like it or not, are all tied up together and it's definitely in our common interest to get along and work towards a recovery from the Global Financial Crisis. Not a single bank can afford another disaster in such a sensitive environment.
8 Food crises
For generations there have been food shortages in Africa, with parents from the developed world using the tired phrase: “There are children starving in Africa” to get their own offspring to eat. But food shortages are felt across the world – in Eastern Europe, particularly during a Communist regime or wartime, in India, parts of Asia, South America, the Caribbean…. Few are exempt. It's estimated that today in America, one in six people go hungry. It might be difficult to reconcile the idea of an obese nation with one of starving children - but both of these extremes are a daily reality in one of the world's richest countries.
7 Global governance failure
Winston Churchill once said: “Democracy is the worst form of government, except for all those other forms that have been tried.” The phrase “governance success” would almost seem like an oxymoron. Governments come and go in all their differing forms but a government's relative success can at least be measured by things like comparative economic stability and less-than-average levels of violence, poverty and sickness. When governments fail so badly, though, that the citizens are pushed to revolt, then a country has serious problems - it can be left with no infrastructure from which another government may be built, and at worst a state of total anarchy. Recent actions of first- and second-world governments (and accompanying results, such as the financial environs, ongoing wars and growing terrorism) might give one pause. The WEF seems to feel that citizens' bad-feeling towards their rulers has become so profound that a global governance failure is one of the higher priority global risks on their 2014 agenda.
6 Greater incidence of extreme weather events
There are those who argue that global warming is a serious issue - and then there are those who say there’s no such thing, or that humans are not responsible for the world’s climate change. The truth, as with most things, lies somewhere in between. It has been argued that the earth has a natural cycle of cooling and warming that has historically been affected by things like the tilt of the planet, number of animals and vegetation, and so on. There is strong evidence to suggest that humans’ contribution to this cycle, though, is speeding things up considerably. Overpopulation, the voracious burning of fossil fuels and immense technological and industrial innovations are all part of the problem. With chronic fires and flooding, the seemingly increased frequency of catastrophic global natural disasters, and abnormal temperatures, and it seems this concern is real enough to warrant real solutions. Let's hope governments heed the WEF's warning and step up to the plate in 2014.
5 Failure of climate change mitigation and adaptation
And so, leading on from extreme weather events, we have the concern that governments are failing to tackle the problem of climate change. The main body of the WEF report makes clear that mitigating climate change is an international responsibility. If we do not collectively change our habits to slow the pace at which climate change now takes place, major repercussions will come to pass much sooner than we might have ever anticipated 20 years ago - this is an exponentially accelerating problem, and even inactivity serves to exacerbate the problem: only proactive changes in habit will mitigate the problem. There are several global conferences dealing with this issue, notably the United Nations' Framework Convention on Climate Change and C40 Cities' Climate Leadership Group. It's now up to local and national governments to commit to the solutions proposed by these groups.
4 Severe income disparity
As TheRichest recently highlighted, the wealth gap is a very real and current problem internationally, even in the world's most developed countries. As a societal risk, income disparity creates tensions that, if left untreated, cause serious instability and an intractable cycle of poverty. Major recessions take the largest toll on the middle classes in developed nations. When this section of society is at great jeopardy, it's both a cause and a symptom of systemic instability. Emerging economies and developing countries are showing greater polarization of incomes as a result of globalization, with the rich getting richer from increased opportunity: Incentives for economic growth are targeted at the already-rich while the poor are not positioned to reap the benefits of economic growth.
3 Water crises
Factors like massive population growth, greater competition for already threatened water resources, and mismanagement of existing resources are some of the reasons behind a realistically looming global water crisis. Add to this that bodies of freshwater are now susceptible to being infiltrated by various waste materials as well as oil and manufacturing by-products, and the picture is gloomy. At this rate, water could well become an exclusive premium in already poor countries if governments decline to intervene in a strong way.
2 Structurally high unemployment/underemployment
In any financial crisis one of the first things that goes is jobs. Everyone cuts spending, both individuals’ personal spending and companies, in any way they can – and unfortunately, that often means people get laid off and unemployment rises. The have-nots continue to suffer from a low income, while those perhaps formerly better off lose wages or have their salary cut, reducing a nation's spending power and adding to a further decline in a country's overall wealth. This can seem like a never-ending spiral unless something dramatic occurs to shift things. Especially at risk in these tough times are young people and minorities, with unemployment rates among youth remaining high at about 50%. Low-quality jobs (or 'underemployment') are all that many can expect, especially in emerging and developing markets.
1 Fiscal crises in key economies
This number one global-risk is at the root of, and is also the product of, many of the issues on this list. The financial fallout in the United States in 2008 has had repercussions around the globe that have not yet abated. There have been bailouts of large institutions, and even whole governments in the EU, but sometimes the bailouts are temporary measures - a bit like trying to remove water from a boat without plugging the leak. Add to that China’s growing hold on much of the major players’ debt, and things are perhaps more unsettled than ever. Instead of plugging an old hole too late, it might just be time to build a new boat.
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